Going forward, businesses need a new strategy for vetting and monitoring the compliance of their suppliers. But don’t just take our word for it. These are among the takeaways from Gartner’s latest guidance on supply chain compliance and management.
Gartner highlights why conventional supplier onboarding methods no longer work as businesses need to onboard suppliers quickly, while also ensuring that suppliers meet their compliance requirements.
The global supply chain compliance crisis
You probably already know that supply chains are under stress, to put mildly. Gartner points to a couple of main reasons why:
- Businesses are increasingly working with suppliers from new geographic regions, where compliance norms may be different. This complicates onboarding and requires a deeper level of compliance inspection.
- Organizations often need to add vendors quickly in order to keep their supply chains moving. Yet, without a fast onboarding process, integrating suppliers is time-consuming, which increases the stress placed on supply chains.
- We’d also add, that issues like global sanctions, which have become especially pronounced as a result of the ongoing Ukraine-Russia war, add even more complexity to vendor onboarding.
We agree wholeheartedly that these are among the key reasons why supply chain compliance and management have become so challenging for the typical business today.
Today, you have to worry not only about whether your vendors meet standard compliance rules, but also about potential sanctions that are subject to constant change. This adds yet more unpredictability and complexity to the onboarding process.
Add to that the surge in supply chain cyber security risks, and it’s no exaggeration to say that operating efficient, compliant supply chains has never been tougher than it is at present.
How to streamline supply chain compliance
Gartner suggests three main strategies for addressing the supply chain compliance challenges that businesses currently face.
1. Create a playbook for vetting vendors
First, Gartner recommends creating a “playbook that grades each third party’s threat level to determine who gets more attention from the business and compliance.”
The idea here is that you can develop preset policies to analyze vendors rapidly during and after the onboarding process. Your policies should reflect information like which risks have impacted your business in the past and how closely a given vendor matches the risk profile of other vendors who have posed challenges.
We love this idea not only because it helps businesses to be proactive in their approach to vendor compliance, but also because it lays the groundwork for compliance automation. Playbooks make it possible to implement vendor compliance validation automatically within a security platform, which could sort vendors into high-risk, medium-risk and low-risk categories
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2. Automate supply chain compliance
The piece quotes Chris Audet, Senior Director of Research at Gartner, who says, “Compliance leaders must move quickly to onboard third parties and effectively monitor for risks, but many of their traditional methods won’t cut it.”
The way to move quickly and monitor for risks comprehensively is to automate risk detection. Automation can help you collect the information you need to make good decisions about vendor risks. It can also automatically flag risks with the help of advanced analytics, and it can help you keep up-to-date as vendor profiles change. In all of these ways, automation helps businesses to complete vendor onboarding quickly, even if they have an increasing number of vendors to vet and face increasing complexity due to new compliance mandates, new sanctions rules or diverse vendor geographies.
3. Streamline upfront due diligence
As another way to speed up onboarding, Gartner advises businesses to “streamline due diligence to focus on critical risks.” It suggests doing this by reducing the number of questions you ask vendors to answer manually. Focus validation around critical risk areas, Gartner suggests, rather than asking a large number of questions that may not be relevant for every vendor.
We agree. We’d add, though, that it’s important to leverage automation wherever possible to collect as much data as you can about supplier insurance, safety, environment and sustainability initiatives, legal and financial data and any other information that can be helpful for gaining a 360-degree view of your suppliers and sub-suppliers. With automation, it’s possible to onboard rapidly without compromising on your visibility into supply chain compliance.
Bonus advice: Establish a compliance-focused company culture
We think Gartner did a great job of capturing much of what it takes to achieve supply chain compliance. But we’d suggest another strategy that Gartner hasn’t mentioned: Building a compliance-centric culture.
A compliance-centric culture is one that maximizes collaboration and communication related to compliance. It aligns compliance with vendor expectations, and it allows all stakeholders – both internal and external ones – to share information rapidly in order to manage compliance and supply chain cyber security risks.
Findings helps you to build this culture by providing a platform that anyone can use to raise compliance flags automatically. With Findings, you get holistic compliance that protects your entire supply chain, while also benefiting from automations that allow you to onboard vendors rapidly.